Healius Shares Trading Close to Fair Value After Rallying Since January

After rallying approximately 35% since the beginning of calendar 2019, shares in Healius are now modestly undervalued relative to our unchanged AUD 3.50 fair value estimate. Major shareholder Jangho's takeover bid in early January 2019 was opportunistic, and the subsequent rejection by the board reflected our opinion that the AUD 3.25 bid undervalued the firm. Healius' large-scale medical centres generate dependable earnings, and its pathology division in particular enjoys competitive advantages--although not enough to warrant an economic moat rating.